I am currently investigating an overtime claim on behalf of a payroll clerk. Many times companies treat payroll clerks and the accounting clerks as exempt employees when they pay them a salary to cover all hours worked. Unless the payroll clerk exercises independent discretion in their duties, the designation as an exempt employee is improper.

In order to exercise discretion on the job, an employee must be able to make policies and approve variations to policies. In the case of which I’m currently investigating the payroll clerk had no authority to do anything out of the ordinary. She entered the payroll data from numerous fast food restaurant employees and prepared it for submission to the chief financial officer.

Common Wage and Overtime Violations

There are many common overtime violations. Many companies violate federal and state laws protecting the wage and overtime rights of American employees and their families.

Some of the most common wage and overtime violations are discussed below.

Failing to pay employees for all time spent working:

Many companies failed to pay employees for all the time they spent performing work-related activities. Some companies, for example, alter payroll or timekeeping records at the end of the pay period. Other companies fail to pay employees for time spent performing work activities before or after their paid shift, for time spent gathering and donning safety or sanitary gear, for time spent attending pre-shift meetings, and for time spent traveling between his shop and the job site and in traveling between clients.

The above conduct is illegal. Employees are entitled to be paid for all time spent performing work-related activities, even if the activities are “voluntary.”

Failing to pay for “unauthorized” overtime:

Some companies claim that employees are not entitled to overtime pay unless it is “authorized” by manager. These companies then refused to pay overtime, even though the manager knows the overtime work was performed. This is illegal.

Applying rounding rules that shortchange employees:

Some companies who use a time clock or other employee punch-in or sign-in system constantly round employee start and end times down to the nearest half or quarter hour. Such rounding practices often a real legal.

Some companies pay employees a salary (instead of an hourly wage) and then tell employee that she is not entitled to overtime because she has an “exempt” job title. This often is illegal.

In fact, many salaried employees are entitled to overtime pay. Whether a salaried employees entitled to overtime depends on his/her actual job duties, not on the job title provided by the Company.

Misclassifying employees as exempt motor carriers:

Some companies contend that employees who drive vehicles as part of their job duties are not entitled to overtime pay under the “motor carrier” exemption to federal and state overtime laws. However, employees who drive small vehicles such as automobiles, vans, or pickup trucks generally are entitled to overtime pay. In addition, drivers who transport passengers exclusively within state lines are entitled to overtime pay.

Allowing work during meal breaks:

Some companies allow employees to perform work during meal breaks or require employees to be on duty during the meal break. This can be illegal, even if the work is “voluntary.” In addition, employees required to be “on-call” throughout their meal breaks generally entitled to be paid.

Independent contractors:

Some companies refused to pay employees overtime by calling them “independent contractors” instead of “employees.” But whether an employee truly is an independent contractor depends on the actual circumstances of his employment. An employee is not an independent contractor just because the company says so.

Failing to include commissions, shift differential pay and other monetary payments in the overtime calculations:

Employees who work over 40 hours generally are entitled to overtime pay equaling 1 ½ times their regular pay rate. Many employees, however, receive commissions and shift differential payments in addition to their hourly pay. In calculating the time and one half overtime premium, most commissions and shift differential payments must be included in the employee’s regular pay rate, and the employee’s overtime premium must be calculated based on this enhanced regular pay rate.

Averaging long and short workweeks:

Employees generally are entitled to “time and one half” overtime pay for all hours worked over 40 in a single work week, which is defined as a period of 7 consecutive days. Companies generally cannot avoid paying overtime by averaging a “long” workweek with a “short” workweek. For example, if the employee works 40 hours in one workweek and only 32 hours and annexed work week, she usually is entitled 8 hours of overtime pay for the first workweek. It does not matter that the first 48-hour week and the 2nd 30-hour week “average out” to two 40 hour weeks.

Compensatory time:

Most hourly employees not employed by the government are entitled to a monetary payment for overtime work. This overtime pay must be calculated at 150% of the employee’s regular rate of pay. It generally is illegal for private sector employers to pay nonmonetary “compensatory time” (or “comp time”) benefits instead of money.

I recently received an inquiry about overtime for Amazon Delivery Drivers. I am investigation. If you are a delivery driver for Amazon and not paid overtime for all hours above 40 in a week, please contact me to discuss your rights.

Amazon Delivery Drivers

Most drivers are employees and entitled to overtime. This issue has been litigated with UPS and FedEx drivers.

Restaurants are allowed to take a tip credit for a tipped employee. What is the tip credit and what is a tipped employee?

Am I a tipped employee?

Under the FSLA, a person is a tipped employee when the amount he or she receives as tips customarily and regularly totals more than thirty dollars a month. There are many different tipped employees, but the most common examples are servers and bartenders. By contrast, non-tipped employees are those who are paid at least minimum wage and do not interact with customers.

Several potential issues can arise with tipped employees.

Can my boss take a tip credit without telling me?

One is failing to provide notice that the employer intends to take a tip credit towards its obligation under the FLSA to pay its employees minimum wage. The FLSA states employers must pay tipped employees a minimum cash wage of $2.13 an hour and apply a tip credit of up to $5.12 an hour. By taking the tip credit, the employer is asserting that the tipped employee is earning enough in tips to make up the difference between the federal minimum wage and the cash wage. An employer is required to provide written or oral notice to tipped employees of the following: (1) The cash wage it is paying, (2) the additional amount claimed by employer as a tip credit, (3) that the tip credit cannot be higher than the amount of tips actually received, (4) all tips received by tipped employee are to be retained by employee, except for when there is a valid tip pooling agreement, (5) the tip credit will not be applied unless the employee was informed of all of the above. If the employer fails to inform the tipped employee of all of the above, the employer must pay the employee at least $7.25 per hour, and tipped employee may keep all tips.

2. Can my job force me to share tips with other employees?

Another very common question tipped employees have is whether or not their tip pooling arrangement is valid. In many restaurants, tipped employees must give a portion of their tips to other restaurant staff members. The idea behind tip pooling arrangements is that many members of the restaurant staff contribute to the service of the restaurant’s customers, so they should also share in the tips.

Under a valid tip pooling agreement, the tipped employee should only be required to share his or her tips with other employees who customarily and regularly receive tips. So, what restaurant employees, other than servers, customarily and regularly receive tips? Many courts address this by asking two questions: (1) Is the employee in the tip pooling arrangement paid less than minimum wage, and (2) Does the employee in the tip pooling arrangement interact with customers? If the answer to either question is “no” then the tip pooling arrangement is not valid. Courts focus on the extent of interaction with customers. Servers, hostesses, bussers, and service bartenders are viewed to have sufficient interaction with customers. Dishwashers, cooks, and janitors are not. Tip pooling arrangements that include these employees without sufficient interaction with customers are valid.

Can my manager or the owner share in the tip pool?

No.

Can I be forced to pay for customers that walk out without paying?

The Department of Labor has explored this issue and responded as follows: “Where deductions for walk-outs, breakage, or cash register shortages reduce the employee’s wages below the minimum wage, such deductions are illegal. Where a tipped employee is paid $2.13 per hour in direct (or cash) wages and the employer claims the maximum tip credit of $5.12 per hour, no such deductions can be made without reducing the employee below the minimum wage (even where the employee receives more than $5.12 per hour in tips).”

Thus, an employer cannot make any deduction based on a dine-and-dash (or any other reason) that results in the employee’s wages being less than minimum wage for the given pay period. The restaurant or bar cannot avoid a violation even if the employee’s tips were high enough to still keep their full pay rate at or above minimum wage after the employer makes a deduction based on a dine-and-dash. The simple principle here is that under federal law, tips belong to the employee, not the employer.

Know your rights as a tipped employee. If your employer has committed any of the above violations or if you have any other questions about how the FLSA applies to tipped employees, contact me.

Sexual Harassment – You must report it. A recent case out of the Fourth Circuit Court of Appeals, McKinnish v. Brennan No. 14-2092 (4th Cir. Nov. 6, 2015), serves as a stark reminder of the important of utilizing employer’s internal sexual harassment reporting procedures if any are available.

In McKinnish, the employee received numerous sexually explicit text messages, photos, and videos from her supervisor over a ten-month period. She considered them to be harassing. But she never reported them to her employer as alleged harassment. McKinnish’s husband eventually reported the messages to the employer after he discovered them. And the employer did the right thing and immediately terminated the supervisor.

McKinnish later sued and alleged hostile-environment sexual harassment under Title VII. The employer (the U.S. Postal Service) argued that McKinnish’s claims should be dismissed because they were subject to what employment lawyers call the Faragher-Ellerth defense. The employer agreed.

Sexual Harassment – What is the Faragher-Ellerth defense?

In 1998, the U.S. Supreme Court used two cases called Faragher v. City of Boca Raton, 524 U.S. 775 (1998), and Burlington Industries, Inc. v. Ellerth, 524 U.S. 742 (1998) to create a defense for employers against sexual harassment claims. It later expanded this defense in a case called Vance v. Ball State.

The Faragher-Ellerth affirmative defense applies when: (i) the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior; and (ii) the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.

In other words, if the employer has an internal policy providing a process for reporting, investigating and correcting incidents of sexual harassment, and employee must make use of that policy. If she fails to do so an it is determined by the court that her refusal to utilize the internal process was unreasonable, she will lose her claim against the company.

Often, employees don’t want to report sexual harassment internally because it is uncomfortable to talk with someone in HR about the problem, because the employee doesn’t believe HR really has her best interests at heart, or she fears retaliation. In fact, that is exactly what Ms. McKinnish argued in her case. Sadly, the court rejected this argument, holding that an employee’s “subjective fears of confrontation, unpleasantness or retaliation” do not alleviate the employee’s duty to alert his or her employer to an allegedly hostile environment.

Bottom Line: Report Sexual Harassment

This is an area where the Supreme Court has been pretty consistent. The courts want employers and employees to try to work out employment-related problems before they resort to going to court. The law requires you to give the company a chance to do the right thing before you sue them.

If you are being sexually harassed, report it.
Report it in writing (email is fine).
Keep a copy (print the email).
Is it possible that in response to your report the company won’t take any action or might even retaliate against you? Yep. But if that happens then a lawyer will be in a much better position to help you and the court will be much more likely rule in your favor.

Employment law governs the rights and duties between employers and workers. Also referred to as labor law, these rules are primarily designed to keep workers safe and make sure they are treated fairly, although laws are in place to protect employers’ interests as well. Employment laws are based on federal and state constitutions, legislation, administrative rules, and court opinions. A particular employment relationship may also be governed by contract.

American labor laws trace back to public outcry against the oppressive practices of the industrial revolution. In the early 20th century, the first laws were passed to compensate injured workers, establish a minimum wage, create a standard work week, and outlaw child labor. In the 1960s and ‘70s, Congress acted to prohibit discrimination and unsafe work conditions. Current issues involve employee healthcare and equal pay for men and women.

Employment Law

Many of the employment disputes that result in litigation deal with “wage and hour” violations. Federal law establishes baseline rules with respect to these issues, and then states are free to pass laws providing additional protections. For example, federal law requires a minimum wage of $7.25 per hour. Several states have approved a higher minimum wage, and employers in those states must comply.

Wage and hour laws also regulate overtime pay. The federal government does not place limits on the number of hours adults may work per week, but after 40 hours time and a half must be paid. Rules exist to control the hours and working conditions for workers under age 18, with special provisions for those working in the agricultural sector. In addition, these laws require employers to post notices and keep basic payroll records.

Discrimination in the workplace is another basis for many employment law cases. The Civil Rights Act of 1964 and subsequent legislation makes it illegal to treat workers differently based on ethnicity, religious beliefs, gender, age, or disability. Hiring an attorney to pursue a discrimination claim is recommended, as detailed procedures must be followed, such as obtaining a Right-To-Sue letter from the Equal Employment Opportunity Commission (EEOC).

Fair Labor Standards Act

The Fair Labor Standards Act applies to “employees who are engaged in interstate commerce or in the production of goods for commerce, or who are employed by an enterprise engaged in commerce or in the production of goods for commerce” unless the employer can claim an exemption from coverage. Generally, an employer with at least $500,000 of business or gross sales in a year satisfies the commerce requirements of the FLSA, and therefore that employer’s workers are subject to the FLSA’s protections if no other exemption applies. Several exemptions exist that relieve an employer from having to meet the statutory minimum wage, overtime, and record-keeping requirements. The largest exceptions apply to the so-called “white collar” exemptions that are applicable to professional, administrative and executive employees. Exemptions are narrowly construed, as an employer must prove that the employees fit “plainly and unmistakeably” within the exemption’s terms.

The Fair Labor Standards Act applies to “any individual employed by an employer” but not to independent contractors or volunteers because they are not considered “employees” under the FLSA. Still, an employer cannot simply exempt workers from the FLSA by calling them independent contractors, and many employers have illegally misclassified their workers as independent contractors. Some employers similarly mislabel employees as volunteers. Courts look at the “economic reality” of the relationship between the putative employer and the worker to determine whether the worker is an independent contractor. Courts use a similar test to determine whether a worker was concurrently employed by more than one person or entity; commonly referred to as “joint employers.” For example, a farm worker may be considered jointly employed by a labor contractor (who is in charge of recruitment, transportation, payroll, and keeping track of hours) and a grower (who generally monitors the quality of the work performed, determines where to place workers, controls the volume of work available, has quality control requirements, and has the power to fire, discipline, or provide work instructions to workers).

In many instances, employers do not pay overtime properly for non-exempt jobs, such as not paying an employee for travel time between job sites, activities before or after their shifts, and activities to prepare for work but are central to work activities. If an employee is entitled to overtime, the employer must pay them one and a half times their “regular rate of pay” for all hours they work over 40 in the same work week.

Employees employed in a ministerial role by a religiously affiliated employer are not entitled to overtime under the act.

If you are working overtime and not getting paid 1 1/2 time for all hours over 40 you should consult an overtime lawyer to determine how you can get paid.

All employees are entitled to overtime unless an exemption applies. The exemptions are sometimes complicated and an overtime attorney can help advise you.

If you work overtime it does not matter that you are paid a salary. It is not how you are paid that counts. It is the job you do and your duties and responsibilities that count.

Working Overtime

The job you perform determines if you are entitled to overtime pay. Complete the for for a Free consultation.

The exemptions provided by FLSA Section 13(a)(1) do not apply to manual laborers or other “blue-collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. Such nonexempt “blue-collar” employees gain the skills and knowledge required for performance of their routine manual and physical work through apprenticeships and on-the-job training.

FLSA-covered, non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt under Section 13(a)(1) of the FLSA nor the regulations at 29 CFR Part 541, no matter how highly paid they might be.

The workweek ordinarily includes all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed work place. “Workday”, in general, means the period between the time on any particular day when such employee commences his/her “principal activity” and the time on that day at which he/she ceases such principal activity or activities. The workday may therefore be longer than the employee’s scheduled shift, hours, tour of duty, or production line time.

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YOUR RIGHT TO BE PAID OVERTIME!

Disclaimer - Not certified by the Texas Board of Legal Specialization. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
Contact Chris Miltenberger to learn about your right to be paid overtime.